An Iraqi Within

Hussain Alshafei escaped Saddams repression and landed in Edmonds to live the American dream. Now hes accused of illegally funneling money home. Was he merely helping fellow immigrants feed the families they left behind, or engaged in something more?

Seattleites wanted to look for possible terrorists in their midst in the face of war and Code Orange warnings, it would be little surprise if they landed upon the name Hussain Alshafei, an Iraqi native living in Edmonds. Alshafei owned a business that appeared to be transmitting funds from Iraqi immigrants living in the U.S. to family members back home, which is a violation of the federal government's embargo on sending money and goods to the land of Saddam Hussein. On Dec. 19, 2002, a multiagency task force created in the wake of 9/11 to combat terrorist financing, called Operation Green Quest, arrested Alshafei and five of his alleged associates around the country in connection with what U.S. Customs Service Commissioner Robert Bonner called "a sprawling illegal financial network" that "funneled millions of dollars to Iraq." Six more, living in foreign countries including Iraq and Jordan, were also indicted. Alshafei was charged with conspiracy and 34 counts of money laundering.

The home of Hussain Alshafei

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Customs authorities, who led the investigation, have not specifically charged Alshafei with financing terrorism. But the involvement of Operation Green Quest suggests the suspicion of terrorist ties, which customs says it is continuing to investigate. It has treated Alshafei accordingly. A swarm of customs agents stormed his house at 4:30 in the morning on the day of his arrest, waking him up. "They were screamingI thought it was a nightmare," Alshafei recalls, showing me marks on his door apparently from the agents' kicks. He says he was handcuffed for hours while the agents scoured his house, seizing papers and pictures. After his arrest, he was put in solitary confinement for nine days.

Having since been released on bond and put under house arrest, Alshafei maintains that all he has ever tried to do was to help his people, victims of Saddam's repressive regime who rely upon money from relatives in the U.S. for basic necessities. Now an American citizen, he would certainly seem to be an unlikely tool of Saddam. Like most Iraqis in the U.S., he came here as a refugee from the tyrant's persecution, which played a particularly heavy role in Alshafei's life. His father was executed, according to Alshafei, after which, he says, the body was fed to the dogs.

But in a world where the ridiculous has come true, Alshafei's story illuminates the government's challenge in walking the line between vigilance and paranoia as it hunts for terrorists. And it demonstrates the impact of that hunt on immigrant communities, which have borne the brunt of suspicion.

Alshafei's tale, which begins in an Iraqi center of opposition to Saddam and traverses the refugee camps of Saudi Arabia, also tells a lot about the politics of a country with which we may soon be at war. Alshafei, though, is not some archetypal Iraqi. He is a character of his own makinga victimized rebel turned extremely successful American entrepreneur. In 30 months, authorities say, he handled $28 million from a client base that crossed the country. He's also someone who enjoyed the good life and strayed from his Muslim roots, a figure who, for reasons having nothing to do with terrorism, incited resentment and controversy within his own community. And exactly what he was up to with his money-transmitting business is yet to be explained.

Alshafei (pronounced Al-SHAW-fay) lives in an upscale, two-story blue-gray house on a typical suburban cul-de-sac of new homes not far from some strip malls. When I arrive at his house unannounced one morning hoping for an interview, he comes to the door as if just out of bed, but doesn't hesitate to invite me in. He gestures for me to wait in a white-walled living room with a Persian-style rug and couches made of what looks like white leather. He returns in a few minutes after assembling himself in a gray sweat suit and sandals. He is a slightly plump 35-year-old with large eyes, tousled jet-black hair, and a voluble manner.

SUFFERING THE PERSECUTION OF SADDAM

As he leads me into his airy kitchen, I see that the popular Arabic channel al-Jazeera is on the large-screen Sony in the adjacent family room. "I have not talked with any media," Alshafei says, and as he speaks, he is scooping tea into a pot, settling in for a visit that will occupy almost five hours.

"They arrested our father, that's how our tragedy begins," he says in his accented and fluent English. As his story goes, they were living in Najaf, a large city in the south of Iraq that is a spiritual and cultural center of the Shias, who follow one branch of Islam and make up a majority of the country's population but have been locked out of power by the Sunni elite. Alshafei's father, a grocer with his own store, had a friendly relationship with the Shia spiritual leader Muhammad Baqir al-Sadr, whom Saddam had gruesomely executed in 1980 by having nails driven through his head. The elder Alshafei, however, was motivated less by religion than a love of democracy, according to his son. He used his interactions with customers as an opportunity to agitate against Saddam.

On Dec. 23, 1981, at 3:30 p.m.Alshafei rattles off the date and time without having to think15 or 20 men showed up at his father's store and abducted him. Alshafei was there at the time, a 14-year-old who spent his afternoons at the store after school. Crying, he ran after his father and was beaten.

For eight years, the family heard nothing about his father's fate. Then one day, Alshafei and his grandfather were summoned to a government ministry, where they were handed a death certificate that showed he had been executed nine months after his abduction. ("Executiondeath penalty" is succinctly listed as the cause of death on a copy Alshafei hands me, which I had translated from Arabic.) When Alshafei's grandfather asked for the body, they learned that it had been devoured by dogs.

All the while, it fell to Alshafei, the oldest son among nine children, to support the family. He did so with a variety of manual jobs, at one point damaging his spine by hauling an 80-kilogram sack of flour on his back. At the same time, he says, he was pulled in by security officers every week for questioning.

"We were suffering a lot," he says by way of expressing incredulity that he could be in league with Saddam and his minions. "They tried to destroy my family." He says after his father's execution, an uncle suffered the same fate. Another uncle was shot in the spine by army officers. One brother, who spoke to me from London, where he lives now, was jailed for seven months. His grandfather was also jailed for a couple months. He says his five brothers-in-law experienced similar persecution in their families; one is the son of an executed Shia imam.

Alshafei, his brother, and his brothers-in-law have another thing in common, according to his recounting: They were all active in the Shia uprising that followed the American victory in the Gulf War. Prosecutors contend that Alshafei served in the Iraqi military during the war and lied about it. He denies it, saying he had a medical exemption from the draft. Even if he had been a soldier, though, he could well have participated in the uprising; many soldiers did. Alshafei is particularly animated as he relates the failure of American troops to support the rebellion, a rebellion encouraged by the senior President George Bush. The president's message was broadcast every day on the Voice of America radio station in Arabic, Alshafei says.

For two weeks, he says the rebels were hopeful. They seized government buildings and, along with Kurdish rebels fighting in the north, took control of 12 of Iraq's 18 states. Alshafei says he helped manage food supplies during this time at warehouses taken over by rebels. But then, Gen. Norman Schwarzkopf, negotiating for the return of U.S. prisoners of war, struck a deal with Iraqi generals that allowed them to fly armed helicopters that were used to suppress the revolt, while American troops stood by under orders not to intervene.

Wanting me to be clear on this point of history, Alshafei plays for me a videotape of a documentary about that time broadcast on KCTS. We listen to Bush's call for Iraqis to "take matters into their own hands" and see Schwarzkopf's negotiation session in the Iraqi desert. "Look, look!" Alshafei cries out at images of Saddam's troops beating rebels begging for mercy. It makes for eerie watching at this time, especially when Bush says to the camera, explaining his decision not to intervene: "I do not want American troops to be pushed beyond their mandate."

As Saddam's army crushed the uprising, Alshafei joined the tide of rebels and citizens who fled for the southwestern border with Saudi Arabia, where American troops were stationed. He says he walked for seven days through the desert to get there, stopping at people's homes to beg for food. The American troops were very good to him and his compatriots, he says, immediately providing food, water, and medicine. Unfortunately, after setting up refugee camps in Saudi Arabia, they departed, leaving the Iraqis to the harsh treatment of Saudi guards. In a random attack, Alshafei says, one guard broke his nose.

Eventually, the Americans came back to interview refugees for potential immigration. Alshafei was accepted, landing in Seattle, where he had a friend, in May 1994. He was 26. He says he spent the first two years receiving medical treatment. He had surgeries for his nose and for a kidney stone and was under treatment for depression. He started working as a janitor and studied English, math, and computers at Edmonds Community College. Then, following the well-worn path of immigrant- turned-entrepreneur, he struck out on his own as a janitorial subcontractor.

In 1998, he started a new line of business, known as money transmitting, an unofficial but burgeoning niche of finance used by immigrants to send money to relatives back home. Due to his legal case, Alshafei is now coy about the details of the business, called Alshafei Family Connect. But he has talked previously about the business in connection with a lawsuit he filed against Bank of America, which handled the business' account. Shortly after the attack on the World Trade Center, the bank closed Alshafei's account without explanation. In a response perfectly in tune with the mores of his adopted country, Alshafei hired a lawyer and charged the bank with discrimination.

It is clear, from the lawsuit, from statements he made to the press at the time, and from an interview with a client, that he was sending money from Iraqis here to their relatives in Iraq and elsewhere in the Middle East. (The lawsuit includes a declaration from a customer who sent money to his family in Iraq.) While not directly confirming this now, he says he was never told that transmitting money to Iraq was illegalnot even by the bank officials with whom he discussed the matter. "If you feel you are a criminal, do you think you would start a lawsuit?" he asks.

Ultimately, the lawsuit got him worse than nowhere. Not only did he fail to win any compensation, but it served as provocation for federal authorities, who cite the lawsuit in their case against him. One day after he settled with the bank, customs agents raided his office. After almost a year of further investigation, he was arrested.

Though he is now well up on the embargo against Iraq, declared as an executive order by the first President Bush in 1990 as well as a separate United Nations resolution, he fails to see his actions as blameworthy. "We try to help our families," he says, imagining someone who instead followed the letter of the law. "How come, I'm living here, I'm eatingI let my mom die? No one accepts that."

SENDING MONEY HOME IS A 'MISSION IN LIFE'

Since the Gulf War, more than 20,000 Iraqi refugees have resettled in mostly Western countries, the U.S. chief among them. They face a paradox: According to the embargo, they are not supposed to send money back to a country that is considered an international threat, capable of conventional, biological, and possibly nuclear attacks. But sending money home is central to the ethos of immigrants who come to the West from developing countries.

"That is their mission in life," says Ibrahim Al Husseini, director of the local Arab Center and himself an immigrant from Lebanon who regularly sends money to his mother there. Individuals who leave their countries for a better life elsewhere leave a lot of dependents behind in places that don't have a social security system or safety net, he says. To expect Arabs, in particular, to refrain from sending money home is "ludicrous," he says. "It's a cultural mandate. It's a religious mandate. It's part of their self-worth."

Though she is Somalian rather than Arab, local immigrant activist Asha Mohamed understands that mind-set perfectly. "For me, personally, I think it was worth it," says the organizer with the anti-discrimination group Hate Free Zone, speaking about Alshafei. "He saw his people suffering." The money he is alleged to have sent supported his people, not the regime, she says. "If that's illegal, I don't know what is legal anymore."

A similar sentiment is voiced with even more fervor at the Iraqi Community Center, a closet-sized office tucked into a larger community center in West Seattle, which provides social service assistance to several thousand Iraqi refugees located around the Puget Sound. Yahya Algarib, a slim, soft-spoken man who is one of two people to run the center, says Alshafei's case has been extremely unsettling in the Iraqi community, though because of its sensitivity at a time of war preparations, many are reluctant to talk about it. "The U.S. government says it wants to help people in Iraq," he says. "We try to help our families, and we're arrested, targeted. It's confusing."

And Iraqis do feel that the charges against Alshafei target the whole community, not just him, according to an Iraqi Community Center client named Muslim who is in the room, and prefers to use only his first name: "It's as if all of us were arrested."

What makes the case even more upsetting, according to Iraqis like Muslim, is that the need in their home country is so great. Since Iraq's defeat in the Gulf War, medicine and food have been in short supply. "My brother is a teacher," says Muslim. "He gets $5 a month. It's not enough for food. What about other expenses?" He says any medical treatment costs at least $20 or $30.

SADDAM: TRADING DINARSFOR DOLLARS

Of course, there is an argument behind the embargo. Most generally, as the head of the U.S. Customs office in Seattle, Leigh Winchell, tells me, anything that helps prop up Saddam's regime, that even keeps the country running, is problematic. As Cuba, South Africa, and Libya have learned, a country unable to buy or sell goods abroad obviously has a harder (though not impossible) time functioning.

More specifically, the embargo is aimed at limiting Saddam's military might. "The idea is to keep hard currency out of the hands of the government," says Daniel Chirot, head of the international studies program at University of Washington's Jackson School. The government would need hard currency to purchase weaponry or materials for building them in the international market, since the local "dinar" is worthless outside Iraq. Even though refugees would send their American dollars to family members rather than the government, Chirot says, the money would likely wind up in official hands if it was changed into dinars, particularly since Iraq is a police state capable of monitoring people's financial transactions.

The weakness in that argument as it applies to the Alshafei case, acknowledged by Chirot and others, is that Saddam has plenty of hard currency already. "We're talking about billions," Chirot says. In the first place, Saddam is known to be skimming money off the hard currency he gets through the U.N.'s "Oil-for-Food" program, which allows his government to sell oil in exchange for money he is supposed to use for humanitarian purposes. Secondly, Saddam is raking in international currency by smuggling oil out through Syria and Turkey to sell.

"He's built so many palaces," says Tom Sanderson, of the Center for Strategic and International Studies, even since the embargo has been in effect and his people have been desperate for food. Evidence of such colossal enrichment makes Sanderson scoff at the notion that Saddam is relying upon a network of refugees sending home remittances in the amount of $100 or $200, even if they added up to a sizable sum. "It's a knee-jerk reaction to think that this money is getting into the hands of terrorists."

It's so improbable that it makes him think that authorities must suspect something else is going on. "What's of greater concern is that Iraqi nationals could potentially carry out sabotage attacks on behalf of Saddam," he says. By that he means people who might, particularly in the event of war, toss a grenade into a shopping mall or launch a car bombing. It is not as unlikely as it seems that Saddam's agents would be found among refugees escaping his persecution. Philip Gold, a Seattle author who specializes in defense and intelligence, calls refugee communities "the classic cover." He recalls working at a Cuban refugee camp after the 1980 Mariel Boat Lift when he was in the Marines. He says twice a week the C.I.A. would swoop in and remove suspected spies.

I've even heard suspicion from local Iraqis that subversive agents were inflaming divisions within the community here. But if it's not unlikely that a spy is lurking in a refugee community, it's also not likely that any particular refugee is a spy. The overwhelming majority are the victims they appear to be, which makes law enforcement tactics a tricky matter. While many immigrants have to deal with unearned suspicionexhibited in a new "special registration" for Muslim and Arab immigrants and stepped-up consequences for minor paperwork infractionsit seems especially unfair when applied to people who have escaped the regimes we're fighting.

"In general, we have been very clumsy in handling refugee communities," says the Jackson School's Chirot. He cites a notorious example out of Britain's past: the arrest during World War II of German refugees, many of them Jews, including the father of one of his friends. "It took a lot of work to convince the English government that German Jewish refugees were probably not Nazi spies."

In short, it's not inconceivable that Alshafei could be working for Saddam, but it's not inconceivable, either, that the government has picked out a guy about as likely to be an agent for his homeland as was a Jewish refugee from Nazi Germany.

THE DANGERS OF DUAL-PURPOSE GOODS

Money-transmitting businesses are known in the Arab and Muslim worlds as hawalas. Until recently, they have operated as unregulated, informal networks that get money to people in often unlikely places. In the post-civil-war chaos of Somalia, for example, there are no banks to wire money to.

Hawalas demand little paperwork and identification. "You tell them, 'This is my name, this is my dad's name, and this, my tribe,'" says Asha Mohamed of Hate Free Zone, who has used them. Somehow they will find the intended recipients. The charge is typically around $5 for each $100 sent, a bargain compared to the $20 fee charged by Western Union to send that amount to some countries. Alshafei's is not the first hawala to come under suspicion. As part of anti-terrorism measures, the government has moved to regulate these businesses at both the national and state levels. (A hawala must now register with the feds and, if pending legislation is passed, will soon have to secure a state license.) In late 2001, federal authorities raided several hawalas around the country linked to an international network known as Al-Barakaat, including one operated by a Somalian out of a Rainier Valley storefront. The authorities said they were investigating whether Al-Barakaat was raising funds for Al Qaeda, but have yet to produce evidence or charges.

Alshafei's hawala was different than most in a couple of respects. Since banks in this country won't wire money to Iraq, he couldn't send money directly. In his lawsuit, he talks about wiring money to bordering countries such as Syria, where he had an agent distribute money ultimately destined for relatives of Iraqi clients. One might presume that someone then ferried the money into Iraq. But as the Customs Service's Winchell explains, it was sometimes more complicated than that.

Winchell presides over a vast region for the Customs Service stretching from Seattle across the Great Plains to Duluth. At least he does for the next few days. On March 1, he expects to become either the head or deputy head of a new agency that will merge a chunk of his office with the Immigration and Naturalization Service and fall under the auspices of the recently formed Department of Homeland Security. A beefy former cop, he works out of an office on the 23rd floor of a downtown high-rise, ensconced in a semicircle of nearly wall-length windows overlooking the Sound.

He flips through the 10-page indictment of Alshafei, which relates to $12 million of the $28 million he is supposed to have handled. "Each one of these chargesnot one of them has to do with money going from an individual in the U.S. to an individual in Iraq for the purpose of helping them eat," Winchell says. What he means by that is that the money took a circuitous route that had other purposes as well. Here's how it worked, according to Winchell: When an Iraqi individual in the U.S. gave Alshafei money, some-one in Iraq immediately, and without waiting for any wire transmission, distributed money to the intended party. That person was "basically floating a loan," Winchell says.

The money entrusted to Alshafei then went to a variety of destinations around the world listed in the indictment, not only countries bordering Iraq, but India, Brazil, Canada, and England. More questionably, it went to businesses for the purchase of various goods that then went into Iraq. The person who floated the loan in Iraq made the money back through these goods. (According to prosecutors, Alshafei in turn used some of the profits on the deal to invest in several properties in Iraq, including a hotel.)

Winchell won't say what the goods were. "I honestly don't remember," he says. But he cites the danger of so-called "dual purpose" goods, commodities as ordinary as clocks that could be used for, say, the timing devices on explosives.

The Brazilian business named in the indictment clears up what some of the goods were: auto parts. By telephone from S㯠Paulo, Twins International director Sarwat Wahab explains that he has a family-run business specializing in Volkswagen and Audi parts, which he exports primarily to North America and Europe. He says he had never heard of Alshafei until he was notified of Twins International's role in the indictment and subsequently checked with his bank to figure out what transaction it could be referring to. He settled on a difficult Dubai customer who he thinks tried to stiff him until he threatened to cancel an order. The money ultimately arrived via an American bank, he thinks probably from Alshafei's account, though he doesn't know for sure. An Egyptian native who has lived in Brazil for the last 35 years, he insists that he "never, never, never" supported or helped anyone in Iraq.

The U.N. considers heavy trucks dual-purpose items. But without further explanation from Alshafei, the feds, or the mysterious Dubai customer, it's impossible to say how the Brazilian's auto parts were used.

And in a way, Winchell says, "it doesn't matter." The bottom line he keeps returning to is that it's illegal to send money and goods to Iraq for whatever purpose. It's unfortunate for Alshafei that he appears to have been doing so at a time that authorities became disinclined to look the other way.

THE AMERICAN DREAM COMES WITH AN ANKLE BRACELET

"I think he deserves whatever he gets," says an Arab activist who is reluctant to speak on the record. This person puts it more strongly than most. But despite supporters within the Iraqi community, Alshafei has not become a cause c鬨bre in the way that have other local immigrants affected by the government's post-9/11 crackdown, most notably the Hamoui family members from Syria, picked up for overstaying their visas.

In part, that's because it's recognized that Alshafei appears to have broken the law. For that reason, Hate Free Zone executive director Pramila Jayapal calls his "a tricky case." And in part, the Arab Center's Husseini ruminates, it's because Alshafei was not known within a circle of Arab activists that he calls "Palestinian, Syrian, and Lebanese centric." An older wave of immigrants from those countries, many of them Christians, settled here in the '60s and '70s. Husseini says that more recent Iraqi immigrants, who started coming in the early '90s, are "not completely plugged in" to the larger Arab community.

Even within the Iraqi community, though, there are mixed feelings about Alshafei, which stem from more personal reasons. As someone who drove a Mercedes, wore leather jackets, and frequently took his live-in Moldovan girlfriend out on the town, he didn't live the life of a traditional Muslim, and he was thought by some to have flaunted his success. Some in the larger Arab community now assume that he earned his wealth by gouging his customers. That appears to be a misperception. According to a client, Alshafei charged a 6 percent fee, roughly the same as other hawalas, and even gave discounts when someone was hard up for cash.

He was, however, focused on making money and building a business with a national clientele. "Hussain is a businessman," says the client who talked to me, sitting in a car on a quiet road so as not to be seen. "Even if he comes to the mosque, it's to show he's still there, sending money. It's like a commercial for him."

Now, as he prepares for his trialscheduled for Aug. 14he's got no money. He says authorities have seized everything, even his Mercedes. His attorney dropped him when he couldn't pay the fees. He now has a public defender. He still has his suburban home, though, where he sits wearing an electronic ankle monitor, an American who watches al-Jazeera about a world crisis that is reflected in every aspect of his life.